ony Hayward, the ex-head of BP Plc, and Roman Abramovich, the billionaire owner of London’s Chelsea Football Club, are vying to prove small-scale plants that turn natural-gas into liquid fuel can make a profit.
The technology is attractive today for two reasons. First, the shale boom in North America has flooded the market with gas, making it cheap relative to oil. Second, in many countries drillers are no longer allowed to burn off gas that’s a byproduct of oil drilling.
The market to stop gas flaring at oil fields alone could be worth $375 billion, according to Oswald Clint, a Sanford C. Bernstein & Co. analyst in London. While a $19 billion Royal Dutch Shell Plc (RDSA) project in Qatar has proved gas-to-liquids works in very large plants, the challenge is making it economic on a smaller scale.
“The primary problem has been confidence that the technology can be deployed commercially,” said Hayward, who invested in February in CompactGTL Ltd., which plans to convert gas into liquids at Brazilian oil platforms.
“Once commercial proof of the concept has been delivered, and once we have a plant operating that has made an acceptable return on investment, then perceptions will change,” he said in an e-mail.